Aerojet Rocketdyne vs. Kratos
$704 in 17 Market Days on $2,000 Margin
We are highlighting a member of our May FAST 50 U.S. Equities Pairs as our stock pair trade of the month for June. Aerojet Rocketdyne Holdings Inc.. (NYSE:AJRD) vs. Kratos Defense & Security Systems Inc. (NYSE:KTOS) . In line with its great backtest (below) the latest LIVE trade delivered $704 Net Profit and a 35% return on margin in 17 market days ($5,000/leg position size and 5:1 CFD margin). Here is Pedro Alonso’s detailed trade entry and exit analysis for this sweet pair trade:
Backtest Results
In backtesting over the two years prior to May 2022, cointegrated and correlated stock pair AJRD/KTOS delivered 3 closed trades, a 100% win rate, a 16% CAGR, an average net profit per trade of $554, and over $1,741 in total profits, all based on only $5,000/leg position size:
Actual Stock Pair Trade Result
In actual trading, AJRD/KTOS called an Entry Signal EOD on 9 May 2020 at a +2.78sd. The trade exited on 2 June 2022, 17 days later at a +0.75sd, delivering a $704 Net Profit and a 35% return on margin! (assumes $5,000/leg trade size and 5:1 CFD margin, illustrative):
Learn to Pair Trade: PairTrade Finder’s FAST 50 Stock Pairs
At PairTrade Finder®we analyse over 2,200 U.S. equities to find you the best USA stock pairs to trade – we do all the hard work for you! We update this analysis on a quarterly basis to ensure these pairs stay fresh and their correlations and cointegrations strong to offer you the highest-probability setups.
Then, with these great pairs pre-loaded into your 24/7 market radar Watchlist, you will receive live trading signals directly on-screen and by email. You can then semi-autotrade these signals directly into Interactive Brokers’ Trader Workstation® for easy execution.
What filters do we use? Here’s the list:
- USA (NYSE/NASDAQ/AMEX): > than $2 bln mkt cap (most much larger), > $2 million/day of avg. daily traded volume($)
- Easy-to-borrow (depending on broker)
- Similar fundamentals: same market, same sector, usually same industry sub group. Beta-similar, market-cap-similar pairs
- Backtested with a +/-2.7 standard deviation Entry Stretch, +/-1.0 standard deviation Exit Stretch
- Two-year backtest period, Stretch & Ratio Moving Average set to 60-day lookbacks
- COINTEGRATION: We select only pairs with a p-value of 0.10 or less over the last 18 months or so
- AVG. CORRELATION: of minimum 50%, preferably higher over the two-year period
- Minimum Average Profit per Trade of $200, preferably $250+ (based on $5,000/leg)
- Compound Annual Growth Rate of Net Profits for each pair preferably in excess of Maximum Drawdown % i.e. positive reward/risk
- Maximum historic drawdown < 20%, preferably <15% (before leverage)
- Win Rate at least 70%
- Maximum Days in Trade of 50 days. This setting represents our time stop. Average trade duration is around 12-15 days
How Can I Get Started to Learn to Pair Trade?
Subscribe todayand receive a 15-Day Free Trial of PairTrade Finder® PRO with these FAST 50 U.S. Equities Pairs PRELOADED into your Watchlist. PTF PRO will immediately begin generating live trading signals from these pairs for your further review!
We also provide you with our acclaimed 4-HOUR, 13-LECTURE PAIR TRADING VIDEO TRAINING COURSE taught by professional pair traders. In it you will learn how to use our great software to easily backtest for the best correlated stock pairs, filter trading signals for entry, apply sensible position sizing and trade management techniques, and manage a portfolio. These videos will help to give you a great shot at reaching consistent profitability in your trading.
Find out all about it atwww.pairtradefinder.com
Happy trading.
Geoff, Paul & The PairTrade Finder® Team
NB: The FAST 50 example pair trades in PairTrade Finder® PRO and the trading signals generated therefrom are provided for informational and educational purposes only. They should not be construed as personalised investment advice. It should not be assumed that trading using the parameters demonstrated by the Software will be profitable and will not result in losses. Please see our full Terms & Disclaimerhere.
